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Security Loan Agreement for Malta

Security Loan Agreement Template for Malta

This document is a comprehensive legal agreement governed by Maltese law that establishes the terms and conditions under which securities are loaned between financial institutions. It incorporates requirements from both Maltese financial services legislation and EU directives, addressing key aspects such as collateral requirements, margin maintenance, rights and obligations of parties, and regulatory compliance. The agreement includes detailed provisions for the transfer, maintenance, and return of securities, along with risk management measures and default procedures, all structured within Malta's sophisticated financial services framework.

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What is a Security Loan Agreement?

The Security Loan Agreement is a specialized financial instrument used in Malta's financial services sector when one party (the lender) agrees to temporarily transfer securities to another party (the borrower) in exchange for collateral. This agreement type is crucial for market making, settlement coverage, and strategic trading activities. The document must comply with Malta's robust financial services regulations, including the Financial Collateral Arrangements Regulations and the Investment Services Act, as well as relevant EU directives. The Security Loan Agreement includes comprehensive provisions covering loan terms, collateral management, corporate actions, default scenarios, and regulatory requirements, making it essential for sophisticated financial transactions in the Maltese market.

What sections should be included in a Security Loan Agreement?

1. Parties: Identification of the lender and borrower, including registration details and addresses

2. Background: Context of the agreement and brief description of the transaction

3. Definitions and Interpretation: Definitions of key terms and interpretation rules

4. Loan of Securities: Core terms of the securities loan, including securities description and loan purpose

5. Delivery and Return: Procedures for delivering loaned securities and their eventual return

6. Term and Termination: Duration of the loan and circumstances for early termination

7. Collateral Requirements: Details of required collateral, including type, value, and maintenance requirements

8. Margin Maintenance: Procedures for maintaining and adjusting collateral margin requirements

9. Rights and Obligations: Specific rights and obligations of both parties during the loan period

10. Income and Corporate Actions: Treatment of dividends, voting rights, and other corporate actions

11. Representations and Warranties: Standard and specific representations made by each party

12. Events of Default: Circumstances constituting default and consequences

13. Tax Provisions: Treatment of taxes and withholding requirements

14. Notices: Communication procedures between parties

15. Governing Law and Jurisdiction: Confirmation of Maltese law governance and jurisdiction

What sections are optional to include in a Security Loan Agreement?

1. Multiple Currency Provisions: Required when securities or collateral involve multiple currencies

2. Agency Provisions: Required when any party acts as agent for other entities

3. Set-off Rights: Optional provisions for rights of set-off between parties

4. Regulatory Compliance: Specific provisions required for regulated entities or specific regulatory regimes

5. Third Party Rights: Required when rights are extended to third parties

6. Electronic Trading Provisions: Required when securities lending occurs through electronic platforms

7. Force Majeure: Optional provisions for extraordinary events affecting performance

8. Custodian Provisions: Required when third-party custodians are involved

9. Central Counterparty Provisions: Required when clearing through central counterparties

What schedules should be included in a Security Loan Agreement?

1. Schedule 1 - Form of Loan Notice: Standard form for requesting and confirming securities loans

2. Schedule 2 - Eligible Securities: List and specifications of securities eligible for lending

3. Schedule 3 - Eligible Collateral: Detailed specifications of acceptable collateral types

4. Schedule 4 - Margin Percentages: Specific margin requirements for different security and collateral types

5. Schedule 5 - Contact Details: Authorized representatives and contact information for both parties

6. Schedule 6 - Standard Settlement Instructions: Details for securities and collateral transfers

7. Appendix A - Fee Schedule: Details of lending fees, charges and payment arrangements

8. Appendix B - Tax Documentation: Required tax forms and documentation

9. Appendix C - Regulatory Disclosures: Required regulatory notices and disclosures under Maltese law

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Malta

Document Type

Security Agreement

Cost

Free to use

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